hey, there! we're live at the nasdaq market site on this rainy friday, but we're going to bring some sunshine. the guys here getting ready behind me. here's what's coming up on the show. ♪ bubbling crew, oil, that is, black gold ♪ and oil has come bubbling up to a three-week high, and traders seeing more room to run. and we'll tell you just how hot. plus, how hot are facebook shares? >> hot! damn hot! real hot! >> but something just happened today that might make you want to take profits. we'll tell you what that is. and have you missed out on the rally? >> god darn, darn! >> well, relax, because we have the group of stocks that could

catch up to the market. we'll explain. the action begins right now. ♪ let's get right to it, starting with a big week for big tech. amazon and apple making multiple record highs this week while netflix jumped 4%. facebook announced a high adding to the tech rally. with stocks at record levels, do you stick with technology? let's get to the money right now. mike, what do you say? >> you know, we're about to hear from carter on this. until we're about to, i would have to say, usually you would stick with what's working and you would stick with growth and you would also stick with something that people just don't seem to be able to short. amazon certainly falls into that category. so you know, i mean, when i'm trying to look for a place that you do see topline growth, where you see consistent eps growth, and this seems to be the sector where you see it, but valuations are the worrisome thing for me from a fundamental point of view. >> for technology, do you think valuations are out of hand? microsoft today hitting a new high. >> i don't think microsoft or

oracle is out of hand. they're reasonable. >> there's definitely a haves and haves not from a valuation perspective. netflix, you could say that's a pretty hefty valuation and has to continue on hit to all cylinders, amazon, too. >> amazon is not tech. netflix is not tech. so, it's just whether idiosyncratic growth, large-cap things that are prevailing that are independent of the economy are maybe overdone to some extent. so, it's tech as a sector, but it's also some of these names individually that have come a long way. >> quickly, in terms of netflix, though, can we give them -- maybe they're playing a long game and they're not focused on the quarter-to-quarter, the fact that they are burning cash, admittedly so, but maybe they're in this for the ten-year plan where it's a land grab. right now they have 7%-8% of the television market globally. you know, think about it, if they just double that, the behemoth they become. i hear you, it's crazy, but

maybe they're in this for a much different reason. >> amazon, right? >> the truth is, if you look at the bottom of what they're doing, amazon or netflix, they don't seem like tech companies, per se, uber you could arguably say the same thing, but tech is propelling the story. you could take over driving people around with technology. you can take over retail with technology. you can take over the entertainment business with technology, and that's what all of these companies are doing. and all of them are trying to do the land grab. jeff bezos admittedly, quite successfully. and i think netflix also quite successfully. >> and listen, tech -- listen, one of my biggest clients said i own a big defense contract. what do you think that? the guys in thinkwarts and skunkwarts, they're the biggest guys of all. they're building missile. there are many ways to get tech without facebook and so forth. >> despite the huge rally, the trumpmaster says it's time to hit the unfriend button on one tech stock. carter, what are you looking at? >> it's facebook, and again, is it tech? is it consumer? we know it's a popular stock,

it's a supercap name and it's come a long way. let's just start with a few things. so, just to put it all in perspective, i thought i'd start with the top three weightings by sector in the s&p. what we know, of course, is that this is the garr gachan, right? apple, microsoft and google and so forth. one, it's reaching -- there's been no time where a sector gets much more than 30%, so keep that in mind. and then let's look at a few things. so, again, only two of the four stocks are in tech, but f.a.n.g. itself, right? the weighting of these four is 6%. if you were to put in apple and microsoft, you'd have 10%-11% in about five, six, total s&p. now, let's talk about facebook. okay, first of all, f.a.n.g., that group, we're going to get to facebook. that group, top chart, those four stocks plotted equal weight broke out to a new high. and yet, they have not made a relative new high since october.

they have underperformed the market for five straight. so, f.a.n.g., these four up, new high, no relative high, meaning, having been in them for five months is a dud. in fact, here are the numbers. since october 24th, you've done half as well as the market. and that's as one of them has gone higher and higher. so, facebook chart, five years. this is what my eye sees. a trend, yeah? and what i think we've got here is where we're getting into the outer limits of what is likely. we're up closer to the top. i want to fade this. i think the stall in f.a.n.g. generally means something. this recent day-to-day is quite steep, so i'm making the bet you're going to come off here. sell facebook, right, paul? do something. >> mike, what do you do? >> as i was articulating, this is a company that's doubled free cash flow over the course of the last two years, so it's hard to think the whole story is going to roll over, but if it is at the top of that channel and you're expecting a modest pullback, one way you could take advantage of that situation is

by selling the may 1.40-145 call spread. you could sell the 140 at $6 and buy the 145s and collect 2.60. you're selling it for $2.60. so basically, even if you flipped a coin, stock's trading $1.42. if it declines, you'll make money, and if it rallies, the most you can lose at $2.40. obviously, it's really hard i think to pick tops in stocks that have been obviously outperforming over a long period the way facebook has. >> i know you love stevie w. and cocoa beware -- >> and dan, i know you're watching in california, thanks for having me on. >> i'm sure he's watching. would you agree with this trade, at assessment of fb? >> yeah, and i've been a huge facebook fan. i still am, but i want "homeland" sunday nights. i know you're a fan. but why do i even bring it up? because the theme has been -- and this is actually a serious point. this whole fake news, this propagation of trying to sway

public opinion, that's actually, if you look, without question, there's something like that going on, and i think the biggest one that loses to that is facebook. wonder if they address it in the quarter, wonder if advertisers start to pull away. as they report april 27th, i think, if you've been long this stock through the run, i think you've got to take money off the table, based on what these folks just said and maybe what i just said as well. >> if we are in an environment where banks are still weak and energy's still relatively weak to the markets, i mean, does facebook get pushed higher because of the gravitational -- >> if you look at its performance relative to google and to the others, it's gone from $115 to $142, on a year-to-date basis, it's ahead of its peers, f.a.n.g. or whatever you want to call them. it's an unsustainable angle at this point. >> yeah, i mean, the way i would think about it is this. either you're going to look for the areas that have been underperforming and might be trying to play catch-up or you're concerned there could be overall market weakness, in which case the outperformers

will likely see weakness. either way, it's had quite a run in the short term and seems poised to give a little back. crude jumping nearly 6% this week, back above 50 bucks, leading to bullish bets on the oil fund etf. uso seeing two times the average ratio to puts. we have other options bets on other etfs this week. what does the options market know, you think, guy? >> that maybe this crude market people thought was crude oil back down to $40, maybe we put in a short-term bottom, maybe there's a bounce. i've got to tell you, a couple stocks are trading that way. conocophillips is starting to move. pete najarian flagged it earlier this week. even the refiners that have been squishy might have found some ground. i mentioned to sorrell during "fast money" about a half hour or so ago and i'll mention it again. if you're looking for a trade, tso against $80 is interesting. and if you think oil is on its way back to $55, you play the named like anadarko petroleum,

apc. >> you know, one of the things i would point out is that when you're talking about refiners, i mean, one of the big things that happened when basically we saw brent trade over west texas is that we had a glut of crude in cushing, mid-continent refiners were able to benefit from that. now we're seeing the pipeline project looks like it's going to go through. that's not going to be an immediate impact, but where's that going to be delivering crude from, alberta, the same mid-continent area. that's the illinois refiners, refiners around cushing, oklahoma. they'll be poised to benefit and now that can stream down to the gulf as well. so i think both of those areas, refiners -- >> i think it's a trap. >> really? >> a trap. >> you have all these -- it's a generational buy here! >> first of all, think about it, there were two things that were guaranteed when this year began -- you have to own financials because interest rates are going higher. total disaster. and the second was that crude is set up perfectly at $52 a barrel. opec's not on board and it's off to the races.

total disaster. sometimes consensus is great, but sometimes it's exactly wrong. just because crude goes up for two, three days, i don't think it's changed at all. looking out to the christmas crude contract for christmas '18, it's projecting no -- >> that is a fair point. 2018 crude oil is off 6 bucks anyhow since the beginning of the year, so we've definitely seen the curve flatten, but that actually isn't really the issue. when you're looking at mid-continent refiners, they are consumers of crude, not sellers and producers of it. so if the commodity you buy goes down in price and the curve long-term indicates it is and you sell the global commodity, you benefit and that's the space. >> these guys have beautiful voices. >> they do. >> hear the dolcit tones -- >> the contrast from this side of the desk and this side. >> demanderthal. did you see "fast money"? and did you see me get jobbed last night? i know we've got to go to break. >> got a question out there, send a tweet to @optionsaction. and check out

optionsaction.cnbc.com. it's like you died and went to options heaven. while there, check out our super cool newsletter. so what are you waiting for? in the meantime, here's what's coming up next. here's what reits have done this year. but there's something in the charts that suggests now is the time to buy. plus, calling all "options action" fans. reach into your pocket, grab your phone, and tweet us your question @optionsaction. if it's nice, we'll answer it on air, when "options action" returns. >> logical. get tomorrow's news today with the "futures now" newsletter. get the latest news, realtime trade updates and a sneak peek at our biggest interviews. stay ahead of the headlines and make today's events tomorrow's profits. sign up now at cnbc.com/futuresnow e-mail. ♪ guyhey nicole, happening here? this is my new alert system for whenever anything happens in the market.

kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade. i just had to push one button wto join.s thing is crazy. it's like i'm in the office with you, even though i'm here. it's almost like the virtual reality of business communications. no, it's reality. introducing intuitive, one touch video calling from vonage. call now and get amazon chime at no additional cost.

hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary.

well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade. welcome back to "fast" -- i mean "options action." i'm dominic chu. as we close out the week, one of the things worth noting is what's happening with the treasury market. interest rates have been feeling heavy as of late with ten-year yields hovering around 2.4% after being as high as 2.61% just a few weeks ago. now, the drop in rates had put a bit of a bid into bond proxy-type stocks, the ones that pay those relatively big dividends like utilities, consumer staples, telecom stocks. well, interestingly enough, that trade has been coming undone, at

least a little bit this week. despite relatively flat overall movements in longer-term yields since last friday, it's these rate-sensitive sectors that are among the worst performers in the s&p 500 during that same time span here. so, the consumer staples sector is up just 0.1% this week. telecom services is down about 0.5%, and then utilities, the worst-performing sector of the week, down a full percent. perhaps interesting, though, here, the real estate sector, which has been the notable laggard, has been slowly crawling higher. the vanguard etf, vnq, is on a multiday winning streak, so melissa, some rate-proxy stocks are doing better than others, even as rates stay pretty static. back to you guys. >> thanks, dom. and "options action" starts at 5:30 p.m. eastern time, right? >> come on, dom. the chart master says reits could be right for your portfol

portfolio. he's at the board. carter? >> what a great setup by dom. that's exactly right. meaning this one group that's lagged has come to life. two lines, one blue, one orange, and you can see what they are. look at the spread over the past year or so between utilities and reits. i mean, utilities have done twice as well and are both highly sensitive rates of the market. let's pull it out. here's the interest rate and here's the spread. reits were up this week, they're starting to act well. that's the whole point. you have this setup of underperformance. here's a five-year. reits lagging by half as much. that's your opportunity, but you only do it once it starts to actually happen, meaning now they're starting to act well. they act well this week when the others did not. so, how do you draw the lines? i mean, you could draw them like this, something of a head-and-shoulders bottom. you could draw them like this, a wedge. but what i see is higher, and i think the action this week is telling. and then finally, since they are

interest rate-sensitive, let's just talk about the facts. utilities are paying you 3.1. iyr is paying you 3.8%. >> let's play the game. let's play the game. we do this on "fast money," folks, for those that don't watch. >> it's true. utilities or reits? >> in this instance, i think the iyr -- and probably mike's going to speak to it, but i think reits in this -- now, if you look over the past five years, you're talking about an instrument that's made a series of higher highs and higher lows, and i think that pattern is still enforced right now. so, yes, if you're asking me which one, the iyr, i think it pushes back towards the 85 level that it failed at. >> mike, what would your trade be? >> i think in this case, looking at iyr, you can look out to september by the 79 calls. you can spend $2.40 for that. we've spoken about this often. you know, we have rosengren coming out this week and talking about having, you know, three more hikes this year.

when the short end of the curve rises, that actually helps keep a lid on the long end of the curve, because what you're trying do is control inflation. also, these real estate companies are big borrowers, so they're going to benefit from lower long-term rates. and finally, even if there is some degree of inflation, you know, these are holders of real estate assets in general. they would be net beneficiaries. >> right now, of course, there are ones that are terrible, like running these malls or outlets. those stocks have structural problems. but as an asset class, reits i think are a good bet here. >> right. within the reits etf -- >> oh, wow! >> -- is this going to be a concern, if there are pockets of the reit industry that are more troubled than other pockets? >> which is interesting. this is now sort of a philosophical question -- >> it is, about etfs. >> -- about what these instruments allow you to do. it hides -- it's t has a masking effect of -- >> for weaker things. >> for weaker things. now, that's a good thing i think when things are heading higher, but i think it can also be a devastating thing, but we haven't seen that yet over the last six or seven years. >> if you have basically the

second-tier mall operators, that's challenging, but the top-tier operators, that's usually a good place, and avolon bay, residential -- >> or equinex doing a sharing facility. shares of nike are down after last week's earnings, bad news for mike and carter who said to buy. they'll give us an except for the trade when we come right back. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade. and the wolf huffed like you do sometimes, grandpa? well, when you have copd,

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♪ guyhey nicole, happening here? this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert.

wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade. welcome back to "options action." we've got a news alert on mylan. meg tirrell is in the newsroom. >> mylan is expanding a recall of the epp pen devices to the united states. this comes after a recall of about 81,000 epipen devices earlier this month outside of the united states. that came after two events where people trying to use their epipens and they didn't deploy accurately. now, those people were okay. they were able to replace those devices, but as a precautionary measure, mylan says that in coordination with the fda, in consultation with the fda, they've decided to do this voluntary recall of 13 lots of the epipen. importantly, this doesn't affect the authorized generic epipen, basically the identical version of the epipen but without the

brand on it, mel. we're trying to figure out how many units this encompasses within the 13 lots. we'll get back to you. >> let's trade mylan labs. >> talking about mylan on valuation, it's ridiculously cheap. i don't know that's even the story right now and mike can speak far more intelligently than i on that, but at six times forward earnings, even with this epipen thing, it's cheap. but that's not why you trade it. they priced a 44 million secondary a couple weeks ago at $40 through morgan stanley. in my opinion, you don't buy the stock until it gets back to that level and holds it. otherwise, i think you look for further down side. the news flow just keeps on coming. it's all negative. time to get called out. we look back on our open trades that aren't working. two weeks ago, carter asaw nike breaking out. >> it's a laggard, that's an opportunity. and now this part here's better than this part here, so you get what you want, which is outperforming. i like nike higher, be on the

long side. >> looking out to june, you can buy the $57.50 calls. this one it was trading $57.80, so these are in the money for just $2.45. >> but nike shares have fallen more than 3% since then, so carter, what do you see in the charts now? >> yeah, so, this is almost like what you call dead wrong, meaning if you're betting something that's acting well is going to get even better in response to fundamental news and earnings beat, and it actually gaaps down, first loss, bad loss, walk away. that's all you can do. >> one of the things about buying bad calls is you are walking away automatically when this happens because they're essentially giving up most of their value, probably worth 40 cents at this point. if you're wanting to hang on, that's about what you'll lose. >> at this point in time, what would you do with nike? >> i actually think it came back nicely from that earnings miss. it traded off, i think got to $52 or so. it's come back, gotten most of it back. it's still in about a two-year down trend. in my opinion, it's got to break

$57.50 on the up side. you buy it on the breakout. >> but the data points we're getting from this little piece of the industry, right, they're not very good, and this past week nike was dragged down by the news out of lululemon. >> yeah. well, that was obviously pretty grim as well. and interestingly enough, $57.50 is the strike we own and you own only for 40 cents, so on that breakout level, you already own it there. lost all weekend -- >> it did bounce. it started to fade, meaning if it bounced, it could have stuck. that would have helped, but it didn't. >> see that? >> it's like i belong on this show! i mean, it's incredible! i love it here. dan who? >> do you want to be the fourth? you could be the fourth trader, maybe. >> you don't need a fourth. >> yeah, we don't. >> it's a very heady show. very heady. >> we don't. all right. up next, send us a tweet and we might read it before the final call from the options pits. hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart.

well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade. what if we could bring you by having better values? at blue apron, we work directly with more than a hundred family farms. so instead of spending on costly middlemen and supermarkets, we can invest in the things that matter most: making farmland healthier. cutting down on food waste. and bringing you higher quality, fresher ingredients for less than you pay at the store. because food is better when you start from scratch. get $30 off at blueapron.com/cook

what?pony neighing] hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade. welcome back to "options

action." time for some tweets. the first one comes from ivanthek who says "do you guys miss dan when he's not there?" not really. just kidding! of course we do! >> of course we do. >> he doesn't miss us. he's on the beach in san diego. >> uh-oh, okay. steve tweets "with the spy being so stable recently, what are your thoughts on selling near-dated iron condors vix too low?" mike? >> this is basically selling volatility, and as long as the market doesn't move around much, you'll obviously make money doing this. that said, we are in basically the lowest level of volatility that you could possibly experience, so the risk on this seems a little high to me. >> one way to look at it, the market is quite range-bound for four or five weeks now, so i wouldn't do it. >> all right. time for the final call, the last word from the options pits. carter? >> i want to take some of my profits, if i have them in facebook, and redeploy them into reits, iyr.

>> mike khouw. >> i think selling the $1.45 call spread in facebook is the bearish play. >> an all carolina final! this is the sallie krawcheck final. watch it monday night. our time has expired! thanks for watching. "mad money" starts right now. >> announcer: you're watching a paid presentation for veggie bullet, brought to you by veggie bullet, llc. from the makers of the world-famous nutribullet comes the next innovation in whole-food nutrition extraction. introducing the veggie bullet, the world's first cyclonic spiralizer and lightning-fast food prep accelerator. now you can spiralize nutrient-rich whole foods in seconds for incredible pasta recipes, like zucchini spaghetti and meatballs or ribbon spirals for great lasagnas, even the family favorite -- curly fries. the secret is the veggie bullet's cyclonic-action spiralizer and high-torque motor with razor-sharp stainless-steel